By Naoko Fujimura
Jan. 20 (Bloomberg) -- Toyota Motor Corp., Asia’s biggest automaker, named Akio Toyoda, the grandson of the company’s founder, as president after reporting the first drop in annual vehicle sales in 10 years.
Toyoda will succeed Katsuaki Watanabe, who will become vice chairman, in June, the automaker said in a statement today. The company’s vehicle sales slipped 4 percent to 8.972 million last year, it said separately.
Toyoda, the first member of the founding family in charge since 1995, will inherit a company expecting its first operating loss in 71 years. Still, Toyota may have ended General Motors Corp.’s 77-year run as the world’s largest automaker, as the Detroit-based company is on life-support with loans from the U.S. government.
“Toyoda is the best one to lead the automaker,” said Hitoshi Yamamoto, chief executive officer of Tokyo-based Fortis Asset Management Japan Co., which manages $5.5 billion in Japanese equities. “Morale in the company is low and the return of the family will help in the crisis.”
Toyota gained 2.3 percent to 3,100 yen at the close of trading in Tokyo. The stock dropped 52 percent last year.
Toyoda’s Challenge
Toyoda, 52, will take over as the carmaker’s two largest markets, the U.S. and Japan, are plummeting, forcing Toyota to reduce inventories by halting production. The company plans to slash at least 5,000 temporary workers in the two countries.
Fluent in English, Toyoda graduated from Tokyo’s Keio University with a law degree in 1979. In 1982, he received a master’s degree in business administration from Babson College in Wellesley, Massachusetts. He joined Toyota two years later.
After factory and finance jobs in Japan, he was assigned to make Toyota’s Japanese sales office more efficient. In 1996, Toyoda was the project leader for a service called G-Book that provides traffic updates. When directors declined to fund a prototype, Toyoda paid with $2,000 of his own money, according to the company. The project was a success.
By 1998, Toyoda was vice president of Toyota’s venture with GM in Fremont, California, producing Corollas for Toyota and Geo Prizms for GM.
U.S. Market
Toyoda’s first crisis as president will likely be the U.S. As the world’s largest economy contracts in 2009, auto sales are forecast to fall to between 10 million and 10.5 million this year from 13.2 million in 2008, according to IHS Global Insight. Last year’s total was the lowest in 16 years.
“No one knows how bad the market will be,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo, which manages $28 billion.
North American sales of Toyota- and Lexus-brand cars fell 13 percent to 2.44 million vehicles last year, and European sales slipped 10 percent to 1.12 million. China and the Middle East were the two fastest growing areas. The automaker boosted sales in China by 17 percent to 585,000 and those in the Middle East by 22 percent to 59,000 units.
GM will report its vehicle sales for last year at 9 a.m. local time on Jan. 21. Toyota topped GM in sales by about 395,000 in the first nine months of last year. In 2007, GM’s sales surpassed Toyota’s by about 3,100 units. The tally includes Toyota’s Daihatsu Motor Co. and Hino Motors Ltd. units.
To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net.
Last Updated: January 20, 2009 01:59 EST
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